PROBLEM NO. 3In the audit of the books of Greenwich Company for the year 2020, the following items andinformation appeared in the Production Machines account of the auditee:CreditDate2020Jan. 01ParticularsDebitBalance-Machines 1, 2, 3, and 4 at P90,000 each P 360,000Machine 5Aug 31198,000Machine 1Machine 6P 3,000Sept 30Dec 01Dec 013196,000432,000Machines 7 and 8 at P216,000 eachMachine 2Balance21,0001,062,000P1,086,000 P1.086,000The Accumulated Depreciation account contained no entries for the year 2020. The balanceon January 1, 2020 per your audit, was as follows:Machine 1P 84,37539,37533,75022,500P 180,000Machine 2Machine 3Machine 4TotalBased on your further inquiry and verification, you noted the following:1. Machine 5 was purchased for cash; it replaced Machine 1, which was sold on this datefor P3,000.2. Machine 2 was destroyed by the thickness of engine oil used leading to explosion onDecember 1, 2020. Insurance of P21,000 was recovered. Machine 7 was to replaceMachine 2.3. Machine 3 was traded in for Machine 6 at an allowance of P12,000; the difference waspaid in cash and charged to Production Machine account.4. Depreciation rate is recognized at 25% per annum.REQUIRED:Determine the adjusted balance of the Production Machine as of December 31, 2020 andDepreciation Expense for the year 2020.

Accumulated depreciation is the overall amount of a company's asset depreciation, whereas…

Answered: PROBLEM NO. 3 In the audit of the books…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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